# TheAttorney General ofTexas

October 9, 1980

MARK WHITE Attorney General
Honorable Wilhelmina Delco Chairman Committee onHigher Education P.0. Box 2910 Austin, Texas 78769 Opinion No. I+~253

Re: Whether anonprofit corporation acting as ‘ahigher education authority under section 53.47(e) of the Education Code Isgoverned by other parts ofchapter 53

Dear Representative Delco:

You request our interpretation of one provision of chapter 53 of the Education Code, relating to the establishment and operation of Higher Education Authorities. AHigher Education Authority may be created bya city. It has the power to issue revenue bonds to obtain funds to purchase student lcen notes guaranteed under the provisions ofthe Higher Education Act of1965. Educ. Code §53.47. Youinquire about the following provision:

(e) In lieu of establishing an authority under the provisions of this chapter, the governing body of a home-rule city or cities may request a nonprofit corporation heretofore organized to exercise the powers enumerated and provided in this section for and on its behalf. If the corporation agrees to exercise such powers, the directors of such corporation shall thereafter be appointed by and be subject to removal by the governing body of the home-rule city or cities, and except asherein provided, Sections 53.14, 53.15, 53.31, 53.32, 53.38, and 53.41 through 53.43 ofthe Texas Education Code shall apply to and govern such corporation, its procedures, and bonds.

Educ. Code §53.47(e). You wish to know whether an authority operating under this provision lsexempt from the sections of chapter 53not cited in section 53.47(e).

Subsection (e) of section 53.47 provides that a nonprofit corporation heretofore organized may exercise the powers enumerated in this section. Subsection (a) of this section provides that an authority heretofore created may issue revenue bonds to obtain funds to purchase student loan notes. It states asfollows:

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Revenue bonds issued for such purpose shall be issued inaccordance with and with the effect provided in this chapter, except Section 53.36 shall not apply, assaid chapter hasbeen modified byChapter 3, Acts ofthe 61st Legislature, Regular Session, 1969, as amended (Article 717k-2, Vernon’s Texas Civil Statutes), and byChapter 784, Acts of the 61stLegislature, Regular Session, 1969(Article 717k-3, Vernon’s Texas Civil Statutes). Such bonds shall be payable from and secured by apledge of revenues derived from or by reason of the ownership of student loan notes and investment income after deduction of such expenses or operating the loan program as may bespecified bythe bond resolution ortrust indenture.

Educ. Code §53.47(a). Inour opinion, section 53.47(a) subjects the nonprofit corporation to all provisions inchapter 53relating to the issuance ofrevenue bonds except for section 53.36. Thus, sections 53.34, 53.35, 53.37, 53.39, and 53.40, would apply to the nonprofit corporation operating pursuant to section 53.47(e) ofthe Education Code.

Inour opinion, the remaining substantive provisions ofchapter 53are not applicable to anonprofit corporation operating under section 53.47(e) ofthe Education Code. Some of the remaining provisions give a coherent body of powers and attributes to Higher Education Authorities, which are not applicable to the nonprofit corporation operating under section 53.47(e) of the Education Code. For example, the Higher Education Authority organized under chapter 53 may acquire educational facilities. Certain other provisions of the chapter are related to this power. Public hearings in the House Committee on Higher Education on the bill which became section 53.47(e) indicate that the legislature was solely concerned with permitting certain existing nonprofit corporations to issue bonds inorder to purchase student loan notes. Public hearings onSenate Bill No. 454, House Committee on Higher Education, May 6, 1975, tape filed with Hearing Reporter, John H. Reagan Building. There was no reference to the power to acquire educational facilities.

Various provisions appear to s&serve the power to acquire educational facilities. These are not, in our opinion, made applicable to nonprofit corporations bysection 53.47. For example, Higher Education Authorities lack the power to tax and the power of eminent &main. Educ. Code §§53.31,.32. Ofcourse, these powers donot exist without a legislative grant, s Lasater v.Lopez, 217S.W. 373(Tex. 1919);Hall v.Wilbarger County, 37S.W.2d 1041(Tex. Civ. App. - Amarillo 1931),aff’d, 55S.W.2d 797 (Tex. Comm’n App. 1932),but inthe case of anonprofit corporation, there isless need to rule out the grant of power byimplication. See Attorney General Opinion H-1067 (1977). AHigher Education Authority may issue revenue bonds secured by the revenue from its facilities, and may operate its facilities on certain terms. Educ. Code §§53.33, .44. Finally, the property owned bythe authority isexempt from taxation because itisheld for educational purposes only. Educ. Code 553.46. Again, these provisions are not relevant to a nonprofit corporation which does not hold educational facilities. Nor issection 53.11,relating tothe creation of a Higher Education Authority, relevant to a hitherto existing nonprofit corporation operating under section 53.47(e).

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Section 53.12 of the Education Code states that an authority comprises only the territory included within the boundaries of the city or cities creating it. Although this provision is not expressly applicable to a nonprofit corporation operating under section 53.47(e), the city using the corporation isstill subject to the general rule that amunicipal corporation’s powers cease at its boundaries and cannot beexercised beyond them without the plain manifestation of legislative intent. City ofArlington v. Lillard, 294S.W. 829 (Tex. 1927);Exparte Ernest, 136S.W.2d 595 (Tex. Crim. App. 19391;Dallas Power &Light Co. v. Carrington, 245 S.W. 1046 (Tex. Civ. App. - Dallas 1922, writ dism’d). The nonprofit corporation may, but is not required to, limit the purchase of notes to notes executed by students attending school in a certain geographical area or by students who
are residents ofthe area. See Educ. Code §53.47(d).

Two final provisions are not expressly made applicable to a nonprofit corporation organized under section 53.47(e). Section 53.45 provides that an authority may borrow money and accept grants from andenter into contracts with the United States, Texas, any municipal corporation, and any public or private person or corporation. The nonpiufit corporation certainly has implied power to enter into contracts necessary to issue revenue bonds and purchase student loan notes and does not need the broader contractual powers referred to insection 53.45. Section 53.13provides that anauthority isabody politic and corporate having the power to perpetual succession, that it may sue and besued, and that it may make, amend, and repeal its bylaws. In our opinion, a nonprofit corporation organized under the Texas Non-Profit Corporation Act, articles 1396-1.01 to 1396-lLO1, V.T.C.S., has at least the power ofperpetual succession, the power to sue and besued, and the power to make, amend and repeal its bylaws consistent with chapter 53 of the Education Code, which powers are necessary to its performance ofits duties under section 53.47(e).

SUMMARY

A nonprofit corporation operating under section 53.47(e) of the Education Code issubject to the sections ofchapter 53referred to inthat section as well asthose sections relating to the issuance of bonds. Although it isnot subject to the other provisions ofchapter 53, other laws having similar effect may be applicable in some
cases.

JOHN W.FAINTER, JR. First Assistant Attorney General Aw

MARK WHITE Attorney General ofTexas

RICHARD E.GRAY Hl Executive Assistant Attorney General

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Prepared bySusan Garrison Assistant Attorney General

APPROVED: OPINION COMMITTEE

Susan Garrison, Acting Chairman Ride Gilpin EvaLoutzenhiser Bruce Youngblood

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